Jumio Looks to Reduce Fraud, Hassle of Mobile Transactions

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As viruses like Heartbleed and security breaches like Target’s massive credit card data hack become more and more common, it’s obvious to Jumio CEO Daniel Mattes that our current online security measures just aren’t cutting it. Basic security precautions like questions about your mother’s maiden name are useless in the age of social media. “These days with Facebook, believe me I will very easily find out,” he says. “All those knowledge-based authentications are not that secure anymore. It’s getting to the point where documents and biometric-based authentication is necessary.”

At the same time, retailers and other vendors don’t want to increase the hassle of online transactions, which can lead to abandoned shopping carts. Mattes says he started Jumio to develop strong authentication and security solutions that will prevent fraud, but won’t adversely affect the consumer experience.

He first got the idea for the company when he was a frustrated customer himself. A few years ago, he was on vacation in France and needed to buy a plane ticket for a friend. What should have been a simple transaction was enormously complicated. Mattes was trying to use a card issued in Austria, working from a computer with a French IP address, and trying to buy a plane ticket in someone else’s name. He had also recently changed his billing address, so the records the bank used to cross-reference his identity were out of date. The whole thing looked understandably sketchy, and he spent four hours of his vacation on the phone with banks and credit card companies trying to verify that he was in fact who he said he was.

At the time, Mattes already had experience dealing with fraud prevention. His previous company, Jajah, was the first peer-to-peer Internet telephone company to use VoIP (voice over Internet protocol.) As criminals realized that they could monetize stolen credit card numbers by buying and selling VoIP services, Mattes and Jajah had to develop verification protocols to help fight fraud.

His previous work experience and the unfortunate four hours he spend on the phone in France made him realize that there had to be a better way. He set out to make the online experience as seamless as buying a cup of coffee at Starbucks, where customers can swipe a credit card without ever showing identification. The answer, he realized, was the camera phone. “Why not use the camera and turn your smart phone into a credit card and ID reader?” he says. “That was the core idea.”

Mattes started Jumio in 2010, with the aim of creating products that would promote higher transaction completion rates, increased revenue, and reduced fraud and chargeback costs, primarily for mobile apps.

Over the past four years, the Palo Alto-based company has raised $36.7 million from investors including Andreessen Horowitz, Citi Ventures, and Facebook co-founder Eduardo Saverin, and grown to a staff of 300. So far, Jumio’s customers include companies like Travelocity, Airbnb, and Western Union.

The company has three main products: Fastfill, Netswipe, and Netverify, and recently announced a partnership with Equifax to create solutions for its new Equifax mobile wallet.

With Fastfill, companies with mobile apps can make it painless for users to input their information. Instead of typing in all their contact information, they can simply take a picture of their identification, and have it fill in automatically. Fastfill recognizes identifications from 110 countries, so the vast majority of users in the company’s two markets—the U.S. and Europe—should be covered.

Jumio’s Netswipe allows consumers to easily pay for online services by scanning their credit cards, no Square-like swiping hardware required. A quick photo replaces the need for a dongle or any extra typing. It also integrates with current payment processing. “If you’re Amazon and you want all your users to pay at home with credit card, a dongle would never work,” Mattes says. “It’s the simplicity and security of Square minus the hardware. I’ve never been a big fan of additional hardware.” Netswipe also has use cases beyond simple online shopping; credit card companies use it to allow customers to activate new cards, while financial institutions that issue reloadable cards can verify that the right user is in possession of the card.

The company’s third product, Netverify, determines whether IDs and documents are authentic. A beta product called Face Match can also provide a score with the probability that the picture on the ID matches the face of the person using it. Consumers can take a selfie and scan a picture of an ID, then Face Match rates the probability. While it may seem unnecessary for lower-risk transactions like online shopping, it helps financial institutions meet the Know Your Customer (KYC) requirements mandated under the Patriot Act. It’s useful for transactions like loan approvals or wire transfers, and it’s also used for verification in online gaming. “I can’t think of any other thing that improves security and makes the process easier,” Mattes says. “Usually it’s more cumbersome and a lot of work.”

For Mattes, the hardest part of launching Jumio was the complexity of the computer vision technology, which is deeply rooted in AI. The company’s technology needed to recognize many different kinds of documents from more than 100 countries, but Mattes couldn’t exactly ask governments to just hand over 100,000 passports—plus 100,000 forged ones to make sure they knew difference. “I was thinking it would take us six months, but really it took us three years and a whole lot of money,” he says. “It’s not possible that two smart Stanford students would come up with this overnight. It just takes time.”

Jumio has also jumped on the Bitcoin bandwagon, forming BISON, the Bitcoin Identity Security Open Network, a group of exchanges working to prevent fraud and provide more confidence in the fledgling crypto-currency, which has no governing body. Eight Bitcoin exchanges are currently members, and Jumio provides them with Netverify so that they can validate user IDs. “That’s our business,” Mattes says. “That’s what we do. We said, ‘Why don’t we form an initiative and help the Bitcoin ecosystem become professional. No one knows what future will be, but one thing is certain, it has to mature.”